Some industry stakeholders say a change in the way businesses are buying their insurance has gathered pace over the last year and has serious implications for brokers. According to recent data, growing numbers of SMEs are buying insurance through a mix of channels, including brokers and directly from insurers. In one survey, three quarters of Australian businesses reported buying coverages with this hybrid approach.
“You can see that there is this absolute shift to a hybrid way of transacting insurance,” said Anthony Pagano (pictured) from Vero Insurance (Vero). Pagano is head of distribution for Suncorp’s intermediated insurance brand.
He said indications that a shift was happening were first noticeable some years ago. Pagano said this new way of engagement is becoming “more and more prevalent” and a higher number of businesses now purchase from a range of risk management and insurance options. This hybrid approach includes engaging with a broker, an insurer and self-insuring.
Other data from SMEs supports this trend.
In 2018, Pagano said more than 25% of businesses surveyed in Vero’s annual SME Insurance Index reported “heavily” using brokers. In the recent 2025 Index, that number has dropped significantly to only 10%.
However, Pagano hastened to add that in 2018, 30% of the businesses surveyed said they did not use brokers to buy coverages. This year the data shows that number has halved.
“You can start seeing that businesses aren’t taking a black and white approach,” he said. “Instead, some have moved from predominantly using a broker to using their broker where it makes sense and, where it makes sense, directly, when it can be easier and cheaper - that's where I feel there is this shift in client behaviour.”
Brokers, he said, need to recognise what this means in terms of how they operate as insurance providers and risk managers.
“This shift is not just in levels of expectation and satisfaction or dissatisfaction,” said Pagano.
He suggested that better use of data and technology would be a way of understanding and meeting these challenges.
“If businesses want to do more insurance directly, what does that mean? Does it mean going through a portal on a broker's website, or having to deal with an insurer direct?” Pagano said. “Or does it mean having to lodge a claim with an insurer directly as opposed to going through a broker?”
Other feedback from SMEs in Vero’s Index, particularly from smaller ones, suggests rising dissatisfaction with brokers.
“The micro-SME segment saw a drop [in satisfaction with their broker] from 87% to 69%,” said Pagano. “I think there’s also what we call the honeymoon effect where we’ve had one third of businesses expressing dissatisfaction after year one or two with a broker.”
However, he noted that this declining satisfaction comes in the context of difficult economic conditions and could actually present a broker opportunity.
“It is very clear that the economic environment, whether it be through inflationary pressures, global or other issues, means clients are really struggling,” said Pagano. “They’re seeking help and there's no better person to help in that regard than an insurance broker.”
However, another underlying and surprising trend stands in the way of this opportunity: the vast majority of SMEs rarely conduct any risk analysis.
“I feel like we're going to continue to talk about the fact that clients aren't hearing this message,” said Pagano. “It highlights to me that we need to think about how we can do it differently and what does risk management actually mean?”
He said brokers can’t wait for the “perfect moment” to start educating their clients. However, they also have to find a simple and compelling way to inform clients about risk management.
“You can't expect to throw this big 100-page business continuity plan at them and have clients say, ‘Yes, now I get it!’” He said.
Pagano said brokers should consider how they can introduce risk management in an easy, step by step process.
He said data confirms that SMEs want and need brokers and are seeking them out for business expertise and claims handling help. That’s where a risk management conversation could start, said Pagano, focusing on the risk management framework that goes along with those needs.
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